InstitutoINSTITUTO de Economía DE ECONOMÍA TRABAJO de DOCUMENTO DOCUMENTO DE TRABAJO 423 2012 Marry for What? Caste and Mate Selection in Modern India Abhijit Banerjee, Esther Duflo, Maitreesh Ghatak, Jeanne Lafortune. www.economia.puc.cl • ISSN (edición impresa) 0716-7334 • ISSN (edición electrónica) 0717-7593 Versión impresa ISSN: 0716-7334 Versión electrónica ISSN: 0717-7593 PONTIFICIA UNIVERSIDAD CATOLICA DE CHILE INSTITUTO DE ECONOMIA Oficina de Publicaciones Casilla 76, Correo 17, Santiago www.economia.puc.cl MARRY FOR WHAT? CASTE AND MATE SELECTION IN MODERN INDIA Abhijit Banerjee Esther Duflo Maitreesh Ghatak Jeanne Lafortune* Documento de Trabajo Nº 423 Santiago, Marzo 2012 * [email protected] INDEX ABSTRACT INTRODUCTION 1 2. MODEL 5 2.1 Set-up 5 2.2 An important caveat: preferences estimation with unobserved attributes 8 2.3 Stable matching patterns 8 3. SETTING AND DATA 13 3.1 Setting: the search process 13 3.2 Sample and data collection 13 3.3 Variable construction 14 3.4 Summary statistics 15 4. ESTIMATING PREFERENCES 17 4.1 Basic empirical strategy 17 4.2 Results 18 4.3 Heterogeneity in preferences 20 4.4 Do these coefficients really reflect preferences? 21 4.4.1 Strategic behavior 21 4.4.2 What does caste signal? 22 4.5 Do these preferences reflect dowry? 24 5. PREDICTING OBSERVED MATCHING PATTERNS 24 5.1 Empirical strategy 25 5.2 Results 27 5.2.1 Who stays single? 27 5.2.2 Who marries whom? 28 6. THE ROLE OF CASTE PREFERENCES IN EQUILIBRIUM 30 6.1 Model Predictions 30 6.2 Simulations 30 7. CONCLUSIONS 32 REFERENCES 32 Marry for What? Caste and Mate Selection in Modern India∗ Abhijit Banerjee, Esther Duflo, Maitreesh Ghatak and Jeanne Lafortune† March 2012 Abstract This paper analyzes how preferences for a non-economic characteristic, such as caste, can affect equilibrium patterns of matching in the marriage market, and empirically evaluates this in the context of arranged marriages among middle-class Indians. We develop a model that demonstrates how the equilibrium consequences of caste depend on whether we observe a bias towards one’s own group or if there is a preference for “marrying up”. We then estimate actual preferences for caste, education, beauty, and other attributes using a unique data set on individuals who placed matrimonial advertisements in a major newspaper, the responses they received, and how they ranked them. Our key empirical finding is the presence of a strong preference for in-caste marriage. We find that in equilibrium, as predicted by our theoretical framework, these preferences do little to alter the matching patterns on non-caste attributes, and so people do not have to sacrifice much to marry within caste. This suggests a reason why caste remains a persistent feature of the Indian marriage market. JEL classification: D10, J12, O12 Key words: Caste, Marriage, Stable matching ∗We thank the Anandabazar Patrika for their cooperation for this project, and Prasid Chakrabarty and the team of SRG investigators for conducting the survey. We thank Raquel Fernandez, Ali Hortascu, Patrick Bajari, George Mailath, Whitney Newey, Parag Pathak, Andrew Postlewaite, Debraj Ray, Alvin Roth, Ken Wolpin, many seminar participants and three anonymous referees for very helpful comments. Finally, we also thank Sanchari Roy and Tommy Wang for outstanding research assistance. †The authors are from the departments of economics at MIT, MIT, LSE, and University of Maryland, College Park respectively. 1 Introduction Marriage is, among other things, an important economic decision. Sorting in families has an impact on child outcomes and the accumulation of human capital, and consequently, on long term economic development and inequality (Fernandez and Rogerson 2001, Fernandez 2003). In developing countries, where many women do not work outside their homes, marriage is arguably the single most important determinant of a woman’s economic future.1 In India, the setting for this paper, several studies have shown that marriage is indeed taken as an economic decision, managed by parents more often than by the prospective spouses. For example, Rosenzweig and Stark (1989) show that parents marry their daughters in villages where incomes co-vary less with respect to their own village. Foster and Rosenzweig (2001) show that demand for healthy women in the marriage market influences investments in girls. Yet, “status”-like attributes, such as caste, continue to play a seemingly crucial role in deter- mining marriage outcomes in India. In a recent opinion poll in India, 74 percent of respondents declared to be opposed to inter-caste marriage.2 The institution is so prevalent that matrimo- nial advertisements (henceforth, ads) in Indian newspapers are classified under caste headings, making it immediately obvious where prospective brides or grooms can find someone from their own caste. It is well known that these types of non-meritocratic social preferences can impede economic efficiency – a point that is often made in the literature on discrimination (Becker 1957). At the same time there is also the view that economic forces will tend to undermine institutions or preferences that generate impose large economic costs on people.3 Indeed we do see the role of caste changing with economic growth and the diversification of earnings opportunities in India: the correlation between caste and income in India is significantly lower now, and caste plays much less of a role in determining the job someone has (Munshi and Rosenzweig 2006). This paper is an attempt to understand why the stated role of caste in marriage remains so strong.4 One possibility is that this is just something that people say, but they do not actually act 1Even in our sample of highly educated females and males, fewer than 25 % of matched brides were working after marriage. 2We use the word caste in the sense of jati (community) as opposed to varna. The latter is a broad theoretical system of grouping by occupation (priests, nobility, merchants, and workers). The jati is the community within which one is required to be married, and which forms ones social identity. 3In the context of the marriage market, for example, Cole et al. (1992) characterize an “aristocratic equilibrium” which is characterized by low levels of productivity because of the weight people put on status. They go on to show that the aristocratic equilibrium may be broken by increased economic mobility because it leads to the emergence of low status men who are nevertheless high wealth, who may be in a position to attract a high status, low wealth woman. 4This is related to the literature in the United States which has looked at how religious homogamy can persist despite the fact that some groups are clearly in minority. Bisin et al. (2004), Bisin and Verdier (2001) and Bisin and Verdier (2000) argue that in this context, there is a strong preference for horizontal matching in order to socialize children within one’s faith. In addition, this homogamy may depend on the availability of partners of one’s own religion and members of a minority such as Jews may actually exhibit higher rates of endogamy. However, these 1 on it–perhaps if we were to observe their actual marital choices we would see that caste is much less important than it is claimed. The fact that many people do end up marrying in caste is not enough to reject this view since it is well-known that caste is correlated with many other attributes and those could be driving the observed choices. To answer the question of whether caste actually matters in the choice of a spouse, we follow the methodology developed in Hitsch et al. (2009), and Fisman et al. (2008) for studying partner choice in the United States. Hitsch et al. (2009) use on-line dating data to estimate racial preferences in the US: they observe the set of partner profiles that a potential dater faces as well as which profiles they actually click on, which is what they interpret as the first act of choice. Since they observe all the attributes that the decision- maker observes, this allows them to identify the decision-maker’s actual preferences. Fisman et al. (2008), do something very similar, using the random assignment of people to partners in speed dating. Both find strong evidence of same-race preferences, the equivalent of same-caste preferences in our context. To look at the strength of caste preferences in marriage, we apply this methodology to a data- set that we collected based on interviews with 783 families who placed newspaper matrimonial ads in a major Bengali newspaper. We asked ad-placers to rank the letters they have received in response to their ad, and list the letters they are planning to follow up with, and use these responses to estimate the "marginal" rate of substitution between caste and other attributes. We find, evidence for very strong own caste preferences: for example our estimates suggest that the bride’s side would be willing to trade off the difference between no education and a master’s degree in the prospective husband to avoid marrying outside their caste. For men seeking brides, the own caste effect is twice the effect of the difference between a self-described “very beautiful” woman and a self-described “decent-looking” one. This is despite the fact that the population in our sample is urban, relatively well off, and highly educated (for example, 85% have a college degree). Interestingly, this preference for caste seems much more horizontal than vertical: we see little interest in “marrying up” in the caste hierarchy among both men and women, but a strong preference for in-caste matches. This is similar to the strong preference for same-race matches that the literature in the United States finds, though our context makes it even more striking: these are ads for arranged marriage in a relatively conservative society where the goal is clearly marriage and as a result, the motives of the decision-makers are likely to be much more classically economic than those involved in online dating or speed dating.